alchemy rory sutherland

Alchemy by Rory Sutherland

“Alchemy” by Rory Sutherland shows us how by thinking outside the box we can create magic in brands, business, and life. While reason is a powerful tool but it has its limits; much of life isn’t logical, it’s psycho-logical. Reality is more subjective than objective therefore context is often more powerful than the content. “It’s not what you say it’s how you say it.” When we start to understand this idea we become alchemists and are able to transform reality.





-Problems almost always have a plethora of seemingly irrational solutions waiting to be discovered, but nobody is looking for them; everyone is too preoccupied with logic to look anywhere else.

-It’s true that logic is usually the best way to succeed in an argument, but if you want to succeed in life it is not necessarily all that useful.

Introduction: cracking the (human) code

-If we allow the world to be run by logical people, we will only discover logical things. But in real life, most things aren’t logical – they are psycho-logical.

-To reach intelligent answers, you often need to ask really dumb questions

-To avoid stupid mistakes, learn to be slightly silly

-If you expose every one of the world’s problems to ostensibly logical solutions, those that can easily be solved by logic will rapidly disappear, and all that will be left are the ones that are logic-proof – those where, for whatever reason, the logical answer does not work. Most political, business, foreign policy and, I strongly suspect, martial problems seem to be of this type.

-It’s important to remember that big data all comes from the same place – the past.

-To solve logic-proof problems requires intelligent, logical people to admit the possibility that they might be wrong about something, but these people’s minds are often most resistant to change perhaps because their status is deeply entwined with their capacity for reason.

-Highly educated people don’t merely use logic; it is part of their identity.

-If you are wholly predictable, people learn to hack you.

-The single most important finding in the advertising industry….is that advertisements featuring cute animals tend to be more successful than ads that don’t.

-Economics should be a subdiscpline of psychology

-Research later showed that individuals whose appendix had been removed were four times more likely to suffer from clostridium difficile colitis, an infection of the colon.

-It is impossible for human relations to work unless we accept that our obligations to some people will always exceed our obligations to others.

-Logic requires that people find universal laws, but outside of scientific fields, there are fewer of these than we might expect.

-We derive pleasure from ‘expensive treats’ and also enjoy finding ‘bargains’. By contrast, the mid-range retailer offers far less of an emotional hit; you don’t get a dopamine rush from the mid-market purchases.

-Our very perception of the world is affected by context, which is why the rational attempt to contrive universal, context-free laws for human behavior may be largely doomed.

-In solving political disputes ‘rationally’ we are assuming that people interact with all other people in the same way, independent of context, but we don’t.

-We do not have full access to the reasons behind our decision-making because, in evolutionary terms, we are better off not knowing, we have evolved to deceive ourselves, in order that we are better at deceiving others.

-The theory is that if all our unconscious motivations were to impinge on our consciousness, subtle cues in our behavior might reveal our true motivation, which would limit our social and reproductive prospects. (Robert Trivers – theory of self-deception)

-“The trouble with market research is that people don’t think what they feel, they don’t say what they think, and they don’t do what they say.” – David Ogilvy

-For a business to be truly customer-focused, it needs to ignore what people say. Instead it needs to concentrate on what people feel.


Part 1: On the Uses and Abuses of reason 

-People may be accurate commentators on their emotional state, but the causes of that emotional state are often a complete mystery to them.

-Shop shutters painted with faces of babies and toddlers seemed to reduce crime significantly at a tiny cost

-If a problem is solved using a discipline other than that practiced by those who believe themselves the rightful guardians of the solution, you’ll fave an uphill struggle no matter how much evidence you can amass.

-It is difficult to get a man to understand something, when his salary depends on his not understanding it.

-It seems likely that the biggest progress in the next 50 years may come not from improvements in technology but in psychology and design thinking.

-It’s easy to achieve massive improvements in perception at a fraction of the cost of equivalent improvements in reality.

-Cost and effort that go into changing a product make it more plausible to a purchaser that there may be a real innovation even if there isn’t one

-There is no such thing as a rational or irrational belief – there is only rational or irrational behavior.

-Scientifically unverified beliefs about burial norms drove rational and life-saving behavior

-In trying to encourage rational behavior, don’t confine yourself to rational arguments.

-One of the great contributors to the profits of high-end restaurants is the fact that bottled water comes in two types, enabling waiters to ask ‘still or sparkling?’ making it rather difficult to say ‘just tap’.

-You can trick ten people once, but it’s much harder to trick one person ten times.

-You are more likely to come up with a good idea focusing on one outlier than on ten average users.

-It is perfectly possible that conventional market research has, over the past fifty years, killed more good ideas than it has spawned, by obsessing with a false idea of representativeness.

-I am not denying for a moment that unconscious racial bias exists, but I am suggesting that people may have an unhealthy predisposition to attribute all disparities of outcome and opportunity between different ethnic groups to it, whereas in reality many other forces may be at work.

-Are people biased against minorities – or are they biased against anyone in a minority of one?

-The Decoy effect….. the phenomenon whereby consumers tend to have a specific change in preference between two options when also presented with a third option that is more desirable than one, but less desirable than the other.

-A distinguishing feature of entrepreneur is that since they don’t have to defend their reasoning every time they make a decision, they are free to experiment with solutions that are off-limits to others within a corporate or institutional setting.

-We should test counterintuitive things – because no one else will.

-In coming up with anything genuinely new, unconscious instinct, luck and simple random experimentation play a far greater part in the problem-solving process than we ever admit.

-“There are two key steps that a mathematician uses. He uses intuition to guess the right problem and the right solution and then logic to prove it.”

-The Argumentative hypothesis states that reason arose in the human brain not to inform our actions and beliefs, but to explain and defend them to others.

-We may use reason to detect lying in others, to resolve disputes, to attempt to influence other people or to explain our actions in retrospect, but it seems not to play the decisive role in individual decision-making.

-It is far too easy to construct a plausible reason for any course of action, by cherry-picking the data you choose to include in your model and ignoring inconvenient facts.

-The more data you have, the easier it is to find support for some spurious, self-serving narrative. The profusion of data in the future will not settle arguments: it will make them worse.

Part 2: An Alchemist’s Tale (Or Why Magic Really Still Exists) 

-We don’t value things; we value their meaning. What they are is determined by the laws of physics, but what they mean is determined by the laws of psychology.

-Almost everything becomes more desirable when people believe it is in scarce supply, and possessions become more enjoyable when they have a famous brand name attached.

-The best way to improve air travel probably lies with faster airports, not faster aircraft.

-If you declare something highly exclusive and out of reach, it makes us all want it much more – call it ‘the elixir of scarcity’.

-Merely adding a geographical or topographical adjective to food – whether in a menu in a restaurant or on packaging in a supermarket – allows you to charge more for it and means you will sell more.

-Descriptive menu labels raised sales by 27 percent in restaurants, compared to food items without descriptors.

-A label directs a person’s attention towards a feature in a dish, and hence helps bring out certain flavours and textures.

-A “gelateria” can charge more than an ice-cream parlour

-The nature of our attention affects the nature of our experience

-Advertising comes from the latin word ‘anima advertere’, or ‘to direct attention’.

-Adding photographs of dishes to a menu seems to heavily limit what you can charge for them. Opinion is divided on why. Some people think that the practice is strongly associated with downmarket restaurants, while others believe that attractive photographs may raise expectation too high, leading to inevitable disappointment when the real food arrives. (Japan is the exception to this rule)

-Creating a name for a behavior implicitly creates a norm for it

-It is always possible to add functionality to something, but while this makes the new thing more versatile, it also reduces the clarity of its affordance, making it less pleasurable to use and quite possibly more difficult to justify buying.

-We naturally assume that something that only does one thing is better than something that claims to do many things
(Generalist vs Specialist)


Part 3 – Signaling 

-Reciprocation, reputation and pre-commitment signaling are the three big Mechanisms that underpin trust.

-An expensive ring is a costly bet by a man in his belief that he believes and intends his marriage to last.

-Upfront investment is proof of long-term commitment, which is a guarantor of honest behavior.

-Reputation is a form of skin in the game: it takes far longer to acquire a reputation than to lose one.

-There are two contrasting approaches to business. There is the ‘tourist restaurant’ approach, where you try to make as much money from people in a single visit. And then there is the ‘local pub’ approach, where you may make less money from people on each visit, but where you will profit more over time by encouraging them to come back. The second type of business is much more likely to generate trust than the first.

-When a company sends you an expensive training course, it signals that it is committed to you for at least a few years.

-If a customer has a problem and a brand resolves it in a satisfactory manner, the customer becomes a more loyal customer than if the fault had not occurred in the first place.

-Costly signaling theory ….the meaning and significance attached to a something is in direct proportion to the expense with which it is communicated.

-the human taste mechanism has been calibrated not to notice the taste of water, so it is optimally attuned to the taste of anything that might be polluting it.

-Effective communication will always require some degree of irrationality in its creation because if it’s perfectly rational it becomes, like water, entirely lacking in flavor.

-Quite simply, all powerful messages must contain an element of absurdity,illogicality, costliness, disproportion, inefficiency, scarcity, difficulty or extravagance – because rational behavior and talk, for all their strengths, convey no meaning.

-Meaning is conveyed by the things we do that are not in our own short-term self-interest – by the costs that we incur and the risks we take.

-In advertising, a large budget does not prove a product is good, but it does establish that the advertiser is confident enough in the future popularity of the product to spend some of his resources promoting it.

-It might be a good rule of thumb for animals to avoid eating brightly colored animals, since something that doesn’t need to adopt camouflage has clearly survived through some strategy other than concealment, and hence it might be best avoided.

-Different forms of status seeking have effects on the wider populations that range from the highly beneficial to the downright disastrous.

-The human brain’s capacity to handle a vast vocabulary may have arisen more for the purposes of seduction than anything else – but it also made it possible for you to read this sentence.

-Why make a better product if no one knows it was you who made it?

-The soviets soon found that, without a maker’s name attached to a product, no one had any incentive to make a quality product, which pushed bread quantity upwards and quality downwards. ?


Part 4: Subconscious Hacking: Signaling to ourselves 

-The fact that something does not work through a known and logical mechanism should not make us unwilling to adopt it

-Placebos work even if you tell people they are placebos

-We like to imagine we have more free will than we really do, which means we favor direct interventions that preserve our inner delusion of personal autonomy, over oblique interventions that seem less logical.

-In populations where food is plentiful we can, in theory, mount a full immune response at any time, but Humphrey believes that the subconscious switch has not yet adapted to this – thus it takes a placebo to convince the mind that it is the right time for an immune response.

-Never denigrate a behavior irrational until you have considered what purpose it really serves.

-The main value of a dishwasher, I would argue, is not that it washes dirty dishes, but that it provides you with an out-of-sight place to put them.

-The main value of having a swimming pool at home is not that you swim in it, but that it allows you to walk around your garden in a bathing costume without feeling like an idiot.

-Not only do people not know what they want, they don’t even know why they like the things they buy. The only way you can discover what people really want is through seeing what they actually pay for under a variety of different conditions, in a variety of contexts. This requires trial and error – which requires competitive markets and marketing.

-Ubers success lay in a couple of astute psychological hacks: the fact that no money changes hands during a trip is one of the most powerful – it makes using it feel like a service rather than a transaction.

-We experience credit card transactions as being over 15% cheaper than equivalent cash transactions.

-Nobody considered that the uncertain delay between having a blood test and getting the result might influence the human propensity to undergo the test in the first place.

-Julia Child was once asked ‘What’s your favorite wine?’ And replied, ‘Gin’.

-An effective placebo must have some effort, scarcity or expense involved.

-Folk remedies may be affective placebos simply because the plants needed to make them aren’t all that common.

-Another important facet of the effect, I suspect, is that it’s important for any consumable product claiming to have medical powers to taste slightly weird. things you apply to the skin would be more effective if they were to tingle or sting.

-Red Bull shares many of the features of a great placebo: it’s expensive, it tastes weird and it comes in a ‘restricted dose’

-If you look at behaviors to hack the unconscious, they all seem to have an element that is wasteful, unpleasant or downright silly.

Part 5: Satisficing 

-We fetishize precise numerical answers because they make us look scientific – and we crave the illusion of certainty.

-In any complex system, an overemphasis on the importance of some metrics will lead to weaknesses developing in other overlooked ones.

-People do not choose Brand A over Brand B because they think Brand A is better, but because they are more certain that it is good.

-We will pay a disproportionately high premium for the elimination of a small degree of uncertainty.

-On platforms such as ebay sellers with approval ratings below 97% can barely sell equivalent goods for half the price of sellers with a track record of 100% satisfaction.

-When we make decisions, we look not only for the expected average outcome – we also seek to minimize the possible variance, which makes sense in an uncertain world. this explains why McDonald’s is still the most popular restaurant in the world.

-By going with the default, you are making a worse decision overall, but also insuring yourself against a catastrophically bad personal outcome.

Part 6: Psychophysics 

-Nothing about perception is completely objective, even though we act as though it is.

-Just as with the colour purple, we should remember that if you design something in a certain way, people can perceive something which doesn’t exist in reality.

-The job of a designer is hence that of a translator. To play with the source material of objective reality in order to create the right perceptual and emotional outcome.

-You cannot describe someone’s behavior based on what you see, or what you think they see, because what determines their behaviour is what they think they are seeing.

-Big Data makes the assumption that reality maps neatly on to behavior, but it doesn’t. Context changes everything.

-We should also remember that all big data comes from the same place: the past. Yet a single change in context can change human behavior significantly.

-In the human sciences what people perceive is more important than what is objectively true

-It doesn’t matter what something tastes like in blind tastings, if you put “low in fat” or any other health indicators on the packaging, you’ll make the contents taste worse.

-In cleaning products, adding the words ‘now kinder to the environment’ to packaging may lead people to instinctively believe the contents are less effective.

-Even if they couldn’t otherwise, people notice a change in taste simply because a change in formulation has been announced.

-The focusing Illusion … nothing is as important as we think it is while we are thinking about it.

-Products are easier to sell if they offer one quality that the others do not.  Even if this feature is slightly gratuitous, by highlighting a unique attribute, you amplify the sense of loss a buyer might feel if they buy a competing product.

-The price you pay for being good at spotting human or animal faces is that you tend to see them when they aren’t really there, but it is a price worth paying.

-The placebo effect might be strengthened if the drug requires some preparation, whether prior dilution or mixing. In addition, by creating a routine around the preparation of a drug before you take it you also create a ritual, which makes it much harder to forget.

-Demanding people do the right thing and for the right reason is setting the bar rather too high.

-The behaviors we adopt shape our attitudes not the other way around

-Behavior comes first; attitude changes to keep up.

-Give people a reason and they may not supply the behavior; but give people a behavior and they’ll have no problem supplying the reasons themselves.

Part 7: How to be an Alchemist 

-The admission of a downside oddly adds persuasive power: ‘Yes, it is expensive, but you’ll soon find it’s worth it, seems to be strangely persuasive construction.

-Make something too cheap without sufficient explanation and it simply might not be believable – after all, things which seem too good to be true usually are.

-Many pretend to despise and belittle that which is beyond their reach. This seems fair enough, though it is worth asking how our lives would feel if we did not play this mental trick on ourselves – we might go about in a constant state of resentment because we were not the billionaire recipient of a Nobel Prize.

-Conventional logic is hopeless in marketing – as you end up in the same place as your competitors.

-Most customers are happy to register after they complete the purchase

-The same thing in a different context can be pleasant or annoying.



-Paying attention to trivial things is not necessarily a waste of time, because the most important clues may often seem irrelevant and a lot of life is best understood by observing trivial details.

-If we are in denial about unconscious motivation, we forget to scent the soap.